Could Tether (USDT) be really called decentralized cryptocurrency?

[Vishnu.Reang]

I am not sure how much decentralized Tether is. A few weeks back, the Kucoin exchange got hacked, and cryptocurrencies including some amount of USDT were stolen. But after a few days, most of the USDT was frozen. Now this may sound like a good thing, as the thieves don't get the profits from their robbery, but it raises serious questions about the decentralization of Tether. If they can freeze wallets like that, then there is a chance that it can happen to anyone.

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[Wingo]

The first sentence in the white paper of Tether (USDT) says the following. A digital token backed by fiat currency provides individuals and organizations with a
robust and decentralized method of exchanging value while using a familiar accounting unit.

Now don't get me wrong. I use USDT a lot, in fact I love it. The fixed price of $1 while being a cryptocurrency makes crypto transactions for purchasing services easy and beautiful.

But I keep thinking of how original paper money was created. In history we had gold for trading. Then gold became inconvenient so bankers offered to hold gold for paper that verifies how much gold is owed to customers. Then this paper became more convenient and was used instead of gold with the trust that its backed by gold. Then this paper a long time later became a currency that isn't backed by gold anymore.

Could the same happen with USDT. If everyone decided to claim original $$$ with their USDT, would Tether Limited issue it all making the price worthless?

Anyway the point I am trying to make is that Tether (USDT) is centralized around the Tether Limited's will to keep it going. This company is basically like a bank too.

No it is regulated and hence is not decentralized. Let's keep in mind that in order for its price to be stable, the distribution of the coin must be controlled.
We know that most decentralized cryptocurrencies are volatile and that's the reason why stable coins are made. The characteristics of tether is very different.

[H1N1]

Are you sure that paper money is not backed by gold anymore now ?
As i know, to create new paper money in my country, it should be backed with gold reserve by the government.
USD Tether is backed by real bank account, that's why the value is stable.

[Abiky]

I am not sure how much decentralized Tether is. A few weeks back, the Kucoin exchange got hacked, and cryptocurrencies including some amount of USDT were stolen. But after a few days, most of the USDT was frozen. Now this may sound like a good thing, as the thieves don't get the profits from their robbery, but it raises serious questions about the decentralization of Tether. If they can freeze wallets like that, then there is a chance that it can happen to anyone.

Only a fool will believe Tether's USDT coin to be completely decentralized. A better classification for USDT would be distributed. The underlying blockchain network (ETH) is decentralized, but that doesn't mean the stablecoin has to be the same. A smart contract platform provides developers the tools to build a token or application the way they want to. There's nothing stopping a developer from writing code that would allow him/her to gain certain control over the token or application's core functionalities. Tether's USDT stablecoin has underlying code which allows the issuer (in this case the Tether company) to blacklist ETH addresses at will. Once an address is blacklisted, the USDT balance cannot be spent anywhere on the Blockchain. This model is no different than traditional banking. Governments can easily pressure Tether to blacklist users who don't comply with KYC/AML regulations or simply because a person's transactions are suspicious. So much for a so-called "decentralized stablecoin" in the crypto/Blockchain space.

Nonetheless, I wouldn't worry too much about Tether's current situation. There are better options out there on the market. DAI is a competitor of USDT and a better option for the decentralized world. Its decentralized design allows people to be their own bank without fear of getting funds frozen or confiscated. Of course, Tether's USDT stablecoin is much more popular than DAI in the crypto/Blockchain space. Most dApps and exchanges support it (despite being centralized). But the time will come when people will look for decentralized alternatives as Tether's single points of failure are exposed. The more USDT addresses are blacklisted, the better it'll be for DAI's adoption in the mainstream world. Just my thoughts

[uray]

Are you sure that paper money is not backed by gold anymore now ?
As i know, to create new paper money in my country, it should be backed with gold reserve by the government.
USD Tether is backed by real bank account, that's why the value is stable.

Which world you are living in, have you heard about the government accumulating gold before printing currency, just in the past few months US minted trillions of dollars and do you really think that they are backed by gold  . Tether is a centralized currency no matter how we sugarcoat it.

[disconnectme]

Even the company never claim they are decentralise and never claim USDT is a decentralised tokens. Looking into the name alon tells you all about the tokens. To be sincere not everything in this space need decentralised system and Tether is one of them, USDT has served the space well and is responsible for the growth of the space, assuming it is Decentralise the marketcap would be lower, jus look at the traction DAI is getting and compared it to other stable coins in the space

[thesmallgod]

USDT is developed by a centralized company using a decentralized blockchain network so in that case, we cannot call USDT decentralized crypto anymore. Most project sugar quote statements in order to suit their narratives. You hardly see a blockchain project that won't mention the word 'Decentralized" today, even some coin such as monero that is decentralized are being traded on centralized platforms

[Silberman]

In theory in order to create one million in tether they must have one million dollars ready to enter their vaults, but that is just the theory because as I said before there have been accusations against tether that this is not the case, however it is really sad that this being a market for decentralized cryptocurrencies has tether as the third spot in the market and ripple on the fourth as well when we know it has very strong ties with many banks, it is as if people simply do not understand or care about this and it is a shame because if this continues to be true it may come the day in which one of those coins will take the first spot on this market away from bitcoin.

Tether's marketcap grow x4 this year alone. Another x3 and Tether would be at the 2nd spot right after bitcoin.

What is more interesting than tether having no funds to back their currency, it is the US closing their eyes and ears to this. Banks don't let the exchanges use their services because they are afraid of the US government, and now the same exchanges can use USD without needing banks for any purpose. On the other hand, the US can close those exchanges or kill tether if they wanted to but for some reason they don't. Which makes it even more interesting.

This is something that I have thought for a long time and I do not know why they allow it, after all I understand why governments are not trying to go against bitcoin too strongly because if they fail, and they will, then they will look incompetent since they have no actual way to completely destroy it, but when it comes to tether and other centralized coins they can do so with ease and yet they chose not to do it which creates a very interesting dynamic and only generates more questions. Does this means governments are behind those coins or at least someone with heavy ties with them? Because otherwise I fail to see how they can allow that.

[TastyChillySauce00]

even some coin such as monero that is decentralized are being traded on centralized platforms

I know that too that means monero can't be called as a decentralized coin when it comes to trade in the centralized exchange site. A stable coin is quite different considering it's both become centralized in or out of exchange site.
The backdoor has created and this means smartcontract is controlling by the team.
I think most of stable coin developers were putting the backdoor in their contract to be able to take the urgent decision when there's a bad case happened like hot wallet of exchange site already hacked.

[MCobian]

Only DAI stablecoins are truly decentralized, whereas USDT is a centralized currency. Because USDT was created by a centralized company,
The development team only wants to attract investors attention by making the issue of USDT is decentralized. Despite the fact they have the
ability to freeze USDT if they wish. Therefore it does not guarantee that USDT holding is safe to do,because we lose control of the USDT we have.

[SlimShadyMmp]

NO is definitely not decentralized I mean those people pump serious amount for really I dont know whats back by Only i know is the most used usd in the market so you are safe for now Crypto is good to go till maybe some government activities start kicking 

[bluebit25]

I think it is not considered as DeFi, I see that everyone of us who loves crypto, USDT is not like the DeFi we want. I see that so far USDT serves as a bridge connecting crypto assets with other assets. I think about what you said that we can ignore paper money, to do that requires a very complicated transition from real assets to all crypto assets.

[puremage111]

No, it is control by a central authority and it can be freeze. Yes it can be frozen

Anyhow, i am fine with centralized product at some point
Large scale hack couldn't work because rollback can be perform or scammed token could be freeze
Since it is pegged to $1, if they can assure that it is always 1:1 backed
I am fine to use this so call "stablecoin"

[Abiky]

No, it is control by a central authority and it can be freeze. Yes it can be frozen

Anyhow, i am fine with centralized product at some point
Large scale hack couldn't work because rollback can be perform or scammed token could be freeze
Since it is pegged to $1, if they can assure that it is always 1:1 backed
I am fine to use this so call "stablecoin"

That's certainly true, mate. USDT is just "Banking 2.0". Why would people interact with a centralized stablecoin if they can simply use Fiat backed by mainstream banks? Crypto is all about being decentralized and censorship-resistant. Take that away from it, and you'll get nothing more than a glorified banking system. Only a fool will believe that Tether (USDT) is decentralized. Living on a decentralized Blockchain network like Ethereum, doesn't mean the stablecoin is decentralized by design. Everything will depend on the code of the stablecoin itself.

The truth is that developers have implemented a "blacklist" function into Tether's code, allowing the issuer to freeze addresses at will. There's nothing we can do to prevent this, since programmable blockchain networks (or should I say, smart contract platforms) allow anyone to code anything to their heart's content. It's up to the person himself to analyze the stablecoin's source code, in order to determine if it's a viable option for long-term investing. But you and I know that not everyone is tech-savvy enough to understand a stablecoin's underlying code. As long as this is the case, people will keep falling for the trap. At least, we have a decentralized alternative called DAI. It's up to you to decide whenever to abandon USDT for DAI, or not.

Nonetheless, there's no doubt that Tether (USDT) is utterly centralized. Other stablecoins like USDC and TUSD are the same. We need more decentralized alternatives in order to reduce centralized stablecoins' dominance on the market. Otherwise, centralized stablecoins will do more harm than good to the crypto/Blockchain industry in general. It's all about eliminating single points of failure whenever possible. Centralized exchanges, centralized stablecoins, and centralized wallets greatly defeat the purpose of crypto/Blockchain tech. If most people continue to rely on centralized services, crypto will be unable to exploit its full potential. Just my opinion

[Ozero]

That's that worst and can't be a decentralized cryptocurrency because of couples of things around it existence. The company that created this coin are centralized and the process of that brought this coins into the cryptocurrency space is through centralization, so, what has centralization got to do with decentralization?. For them said they are decentralized then they are liars and should not be trusted

Why should anyone think that Tether can be a decentralized cryptocurrency? For every USDT you buy, Tether must deposit $ 1 into a dedicated bank account as collateral. This collateral should not be used by the issuer for any third-party purposes, but as a coin holder, you cannot check the status of the accounts yourself. USTD is centralized.

Tether is the same dollar, only in digital form, and at the same time, this stablecoin is not owned by the state, but by a commercial structure.  Therefore, this coin is completely centralized, and tether can be classified as a cryptocurrency very conditionally.

[Festac]

The first sentence in the white paper of Tether (USDT) says the following. A digital token backed by fiat currency provides individuals and organizations with a
robust and decentralized method of exchanging value while using a familiar accounting unit.

Now don't get me wrong. I use USDT a lot, in fact I love it. The fixed price of $1 while being a cryptocurrency makes crypto transactions for purchasing services easy and beautiful.

But I keep thinking of how original paper money was created. In history we had gold for trading. Then gold became inconvenient so bankers offered to hold gold for paper that verifies how much gold is owed to customers. Then this paper became more convenient and was used instead of gold with the trust that its backed by gold. Then this paper a long time later became a currency that isn't backed by gold anymore.

Could the same happen with USDT. If everyone decided to claim original $$$ with their USDT, would Tether Limited issue it all making the price worthless?

Anyway the point I am trying to make is that Tether (USDT) is centralized around the Tether Limited's will to keep it going. This company is basically like a bank too.

USDT is a full 100% centralized stable coin and that can't be denied, USDT is pegged by 1:1 Dollar and it works very well, don't let the decentralized confuse you if that truly appears in USDT whitepaper, Tether is a centralized company and they can't deny that USDT is true centralized digital USD

[Abiky]

Tether isn't decentralized and don't think they're advertising themselves as one. There operations are very centralized from the freezing of backlist address to printing billions from thin air without any real hacking just like how the fiat system is operated. Next they are govern by centralized body which the banks are known for. Manipulation can also be observed as the parents chain of the company prints new tether when they please just to favor themselves. Stablecoin like Dai are those that are decentralized as they're backed by smart contract on the Ethereum blockchain.

Exactly. But most people don't think that way. They believe that EVERY stablecoin is decentralized as long as it's powered by Blockchain technology. A true misconception surrounding the crypto/Blockchain space if you ask me. As long as this sentiment continues, people will continue falling for Tether's schemes. At least, we have decentralized alternatives that are able to live on their own. DAI is the most popular decentralized stablecoin, yet it suffers from low liquidity and mainstream adoption (compared to its centralized counterparts like Tether and USD Coin). It's no wonder why Tether it's still at the top among other stablecoins on the market.

The constant issuance of USDT tokens, has allowed Tether to remain among the top 5 cryptocurrencies by market cap. Bittrex continues to pump the stablecoin's market cap in order to maintain its dominance. Believe me, this is bad for the whole crypto/Blockchain industry in the long run. If Bittrex ceases operations or governments take down Tether (USDT), you'd expect a massive downfall in price of major cryptocurrencies on the market. At least, there will be a recovery in price after a while. My guess is that another centralized stablecoin will take Tether's place sometime in the future. As long as we have the choice of decentralized stablecoins, nothing else matters. Just my opinion

[Abiky]

Tether isn't decentralized and don't think they're advertising themselves as one. There operations are very centralized from the freezing of backlist address to printing billions from thin air without any real hacking just like how the fiat system is operated. Next they are govern by centralized body which the banks are known for. Manipulation can also be observed as the parents chain of the company prints new tether when they please just to favor themselves. Stablecoin like Dai are those that are decentralized as they're backed by smart contract on the Ethereum blockchain.

Exactly. But most people don't think that way. They believe that EVERY stablecoin is decentralized as long as it's powered by Blockchain technology. A true misconception surrounding the crypto/Blockchain space if you ask me. As long as this sentiment continues, people will continue falling for Tether's schemes. At least, we have decentralized alternatives that are able to live on their own. DAI is the most popular decentralized stablecoin, yet it suffers from low liquidity and mainstream adoption (compared to its centralized counterparts like Tether and USD Coin). It's no wonder why Tether it's still at the top among other stablecoins on the market.

The constant issuance of USDT tokens, has allowed Tether to remain among the top 5 cryptocurrencies by market cap. Bittrex continues to pump the stablecoin's market cap in order to maintain its dominance. Believe me, this is bad for the whole crypto/Blockchain industry in the long run. If Bittrex ceases operations or governments take down Tether (USDT), you'd expect a massive downfall in price of major cryptocurrencies on the market. At least, there will be a recovery in price after a while. My guess is that another centralized stablecoin will take Tether's place sometime in the future. As long as we have the choice of decentralized stablecoins, nothing else matters. Just my opinion

[pamsugas]

That won't happen man, the case this time is different from before when the USD is not supported by gold because the volume of gold cannot exceed the volume of trading in the world. So there is no reason USDT is printed without being supported by USD. USDT will remain supported by USD!!

[_IRMAN]

Tether cannot be called decentralized, because this token is regulated by the owner, the price is stable and the developer can freeze the token at any time.